Forging an effective franchisor-franchisee relationship

The success of a franchise hinges on the relationship between the franchisor and its franchisees, says Annabel Jones, HR director at ADP UK

The relationship between a franchisor and franchisee is one of the most unique business models. While the connection is bound by contract, in reality it is much more complex. On one hand, it could be compared to a marriage due to its relative intimacy, while on the other hand it is closer to a parent-child relationship. Yet such comparisons undermine the magnitude of responsibility for both parties, as there is a strong requirement for establishing a shared culture, need for clarity in communication and focus on achieving clear goals.

A more appropriate metaphor for the bond between a franchisor and a franchisee may therefore be that of a mentor and student. The franchisor must offer continuous guidance, help and expertise to support the franchisee in building and sustaining a successful business model. The franchisee, on the other hand, should ensure they remain open to advice, show a willingness to learn and listen to the franchisor. By adhering to both roles, the bond between the franchisor and franchisee will strengthen and success will become more likely.

Yet at the root of this bond – and all franchise systems – there must be an underlying sense of mutual respect and collaboration. The franchisor entrusts what may be their life’s work into the hands of a new partner. But, at its best, a franchisor-franchisee relationship can be a win-win for both parties. While the franchisee receives the brand name, sales or operating systems and ongoing support from the franchisor, the franchisee invests their money, time and energy into helping to build the brand and boost profit margins.

With so much at stake for both franchisors and franchisees, it is essential that both players commit to building a cohesive and engaging relationship.

Creating a common culture

First and foremost, there must be a common culture between the franchisor and the franchisee. A shared set of ethics, values and principles creates a foundation for their relationship and fosters trust and respect. The franchisee must be able to adopt the business’ culture, help its employees identify with it, and even be willing to defend it. This ensures their investment in the brand is a sincere one and will go the distance.

The franchisor can take a number of steps to facilitate and build this enthusiasm. They should effectively convey the brand’s narrative, which will shape an identity for the company and can also be a key way to build appeal for customers. For example, those customers who have previously had a positive experience with the brand will be more inclined to revisit the franchisee that most effectively reflects the same brand culture. The franchisee will then benefit from the loyalty of pre-existing customers and reap greater rewards.

Internal communication and training play an important role in building the culture and educating franchisees. Franchisors could build excitement through informative yet motivational videos or testimonials of franchisees who have already gained success through the business model. Seeing the accomplishments of other franchisees will stimulate a desire in the franchisee to adhere to the business model that will also help them achieve success.

Embracing effective communication

The ability to communicate effectively is fundamental to building an engaging relationship between franchisors and franchisees, as poor communication is often the root cause of major business issues. For starters, it may lead to confusion over the strategy or the responsibilities of each party. Furthermore, it might foment what Greg Nathan, chairman of the Franchise Relations Institute, terms a me and you mindset. If there is a lack of engagement, the franchisee may begin to mistrust the franchisor and feel that they are in competition or they may start feeling apathetic about standards.

To avoid issues arising, it is important for the franchisor to frequently correspond with franchisees. For SMEs, this correspondence may be in the form of personal visits or frequent calls discussing an array of issues. Larger franchises may instead communicate via regular newsletters or hold conferences that provide guidance, support and address franchisees’ common concerns. This is particularly important for franchises on a global level, where communication is restricted by time, cultural and language barriers. In such cases, it is important that franchisors ensure they have a regulated system of correspondence that enables efficient and frequent communication with each and every franchisee.

Conversely, communication is a two-way street and the franchisor should listen to their individual franchisees as opposed to just barking out advice dogmatically. In fact, one of the leading factors of positive change cited by franchisees is their franchisors’ willingness to listen. Supporting each franchisee in difficulties they are facing and addressing concerns they have not only mitigates problems before they become detrimental but it also provides franchisors with a wealth of information about their organisation.

The importance of this open and honest dialogue cannot be understated. Not only does it allow the business to overcome issues before they become serious crises but it also improves the overarching strategy. By revealing issues, scenarios and loopholes that the franchisor may not have known existed, the business can strengthen as a result of overcoming challenges and grow as a consequence.

Building focus through leadership

Finally, the creation of focus through good leadership is crucial in building an engaging relationship between the franchisor and franchisees. Franchisors must direct the franchisee towards clear and mutual goals, articulating a plan that drives all franchisees towards achieving these goals and reaping in the success that follows. When franchisees are focused on goals in all aspects of the business whilst being held accountable to someone, the franchise is far more likely to thrive and succeed.

Some of the most significant causes of disengagement are mistrust and a lack of focus, which may ultimately cause the business to suffer or even collapse. Good leaders make space for others to grow, provide guidance when required and accept feedback from their partners, employees and other stakeholders. Maintaining a healthy balance between authority and responsibility will enable the organisation to meet its goals, while further supporting the relationship between the franchisor and its franchisees. By staying focused and listening to its franchisees, the business is able to stay one step ahead and ensure that its strategy is innovative and ready to respond to changes in the marketplace.

The relationship between a franchisor and a franchisee is multifaceted. Whether you compare it to a marriage or mentorship, it is clear that both parties must be invested in making the relationship work. The brand’s story is the heart and soul of the franchise, while a strong set of values and a common culture provide the business with a solid ground for success. Furthermore, the importance of committing to efficient communication and establishing the right level of leadership cannot be understated when enhancing engagement among each player.

Taking time to invest in each of these factors will ensure a balanced franchisor-franchisee relationship is maintained and means that everyone will reap the rewards from a productive, engaging and high performing business model.

About the Author

As HR director for ADP UK, the payroll and HR services provider, Jones knows a fair bit about people management. And this made her the perfect candidate to write us a series of columns on the HR dilemmas that regularly face franchisees and franchisors. Out of the office, Jones has recently taken up jogging, which should help when it comes to running around after her husband and daughter.